Rightful Ways of Reducing Your Taxes

Tax time can be a difficult time for many, especially the non-accountants and non-tax lawyers. Should you go for the standard deduction or itemize? If you itemize, what can you claim? This article is a short discussion of what tax deductions are, what are the common types to avail of, how to know if you qualify and how to take advantage of them. For additional specific IRS assistance, it is best to consult an accountant.

To explain, tax deductions are those expenses that a taxpayer incurs as a result of a number of reasons and purposes. This deduction is taken from the gross income. This causes the taxable income to decrease, which further means less taxes. Let us take a gross income of $100,000 as an example. The deductions mean less tax because your taxable income is substantially reduced.

There are two types of deductions: the standard deduction and the itemized deduction. A standard deduction is a single dollar amount that is taken from your gross income to determine your taxable income. Different amounts are set for married couples, singles and heads of households. On the other hand, itemized deductions are the corresponding amounts of pre-determined expenses that taxpayers qualify for. IRS and private assistance are always available if you are unsure of which deductions you are entitled to.

Tax credits, which are not the same as deductions are also available. Certain expenses like having children, adopting children, paying college tuition, and energy efficiency, among others, entitle you to a tax credit. The IRS online system and tax forms can give you the criteria for checking your qualifications for certain tax credits. Credits are different from deductions in the sense that the former are deducted from the total taxable income, not the gross income.

Here are a few of the most common tax deductions that we can avail of:

* Fees for professional and business-related associations
* Job-hunting costs
* Job agency fees
* Fees for professional references and magazines
* Union dues
* Work clothes or uniforms
* Expenses for the house and office
* Legal fees to collect taxable income, such as alimony
* Tax advice and tax preparation fees
* Costs Incurred from moving to a new job
* Fees for IRS set-up and administration
* Some legal fees
* Charitable donations
* Business liability costs and insurance premiums
* Tuition fees for job-related classes

When calculating for your taxes, always seek IRS assistance so you don't overpay. The IRS booklet, online information and the online tax preparation service, however, are useful references for itemization if you choose to do this on your own.

A number of ways are available in knowing if you qualify for these deductions. Among these methods is using the instruction booklet. In addition, the online tax preparation service guides you as you go through the process. Obviously, an expert would prove to be of utmost assistance in your claims.

Increasing the amount for refund or decreasing the amount of taxes due are lawfully addressed through tax deductions. Be sure to employ professional assistance to be certain that you claimed what is due - or that you have not wrongfully benefited from some benefits. If you're on your own, make sure you go over instructions very carefully. Many taxpayers in reality, pay too much, so be sure you know what you can and can't use as deductions.